Analytics for insurance: the real business of big data

The new age of data, devices and the Internet of things is transforming the insurance industry and while analysis is the key to gaining insight and extracting value from data, it is not the destination – it’s what you do with these insights that matter. 

The effective use of analytics is critical to support and implement strategy, create new tactics and design new best practices. All lead to better profitability, lower cost and less risk for insurers and they enable new products and services to be introduced more effectively.

The insurance industry however is fragmented and many departments operate in silos. For insurers to become truly analytical in nature, they have to be prepared to take a holistic view of all data and use it effectively (brokers and suppliers being a key part of that data creation). 

The book is relevant to all insurance professionals, wherever they may work – underwriting, claims, risk, marketing, etc – and it refers to the differing lines of insurance business such as personal, commercial, life and speciality. It is valuable for mature and emerging markets; already the publishers are working on a translation for the Chinese insurance marketplace which is growing at 20% annually.

Other emerging nations such as Brazil also have the potential for massive growth which will be fuelled by better analytical insight.

It is critical business people understand the technology that will affect the way they work, and for technologists to understand the complexities of insurance like indemnity and subrogation. There’s also a chapter devoted to location analytics which is essential to the insurance sector – after all, isn’t everything and everyone somewhere?

Insurance professionals must also remember the role of insurance in society. We already think about the impact of cloud computing, mobile technology and social media but the insurance industry needs to plan for the next wave of ‘mega trends’. These will include the connected car, home, person, urbanisation and new distribution models like Blockchain data recording. All have implications on insurance policies, process and practices. 

The author describes himself in the book as lying awake at night thinking about the convergence between insurance and technology. It’s easy to reflect on the past and present but more difficult to think about the future. Part of the future will involve ‘Cognitive Analytics’ which allows users to analyse data inside and outside their organisation, and to interact with the system using everyday natural language. He already says there are impacts in healthcare and financial services, and insurance will be affected soon. It will not only change the way we work, but also impact on leadership.

Tony Boobier is an independent consultant to the insurance industry focussing on data and analytics. A recognised international speaker and industry commentator with 30 years insurance industry experience, he was until recently a worldwide executive with IBM. His first book ‘Analytics for Insurance: The Real World of Big Data’ has received international acclaim and is described by Professor Tom Davenport (Babson College, Massachusetts) as the book insurers ‘need only read if that want to remain in business’. Tom is one of the top three leading international authorities on analytics.